What Are the Advantages of Tax-Deferred Accumulation?

According to the Tax Foundation the top 25% of taxpayers pay 86% of the federal income taxes and have adjusted gross incomes of $70,492 or more.

This calculator is designed to help you estimate the potential future value of tax-deferred investments vs. taxable investments using an identical hypothetical annual rate of return.

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The chart below illustrates the difference tax-deferred accumulation can make. The highest line on the chart shows the tax-deferred amount accumulated assuming the values you entered. The middle line on the chart demonstrates the tax-deferred amount accumulated after taxes have been paid according to the tax rate you selected. The lowest line on the chart shows the amount accumulated assuming the same values, but with earnings taxed annually.

If you are investing for long-term goals, such as retirement, you may want to consider tax-deferred alternatives. We can help you sort through the various investment options to determine what may be appropriate for your situation.

Advantage of Tax-Deferred Accumulation

The information provided is not specific investment advice, a guarantee of performance, or a recommendation. Typically withdrawals from tax-deferred investments are taxed as ordinary income and any withdrawals taken prior to age 59 may be subject to an additional 10 percent federal tax penalty. A plan of continuous or systematic investing does not ensure a profit and does not protect against loss in declining markets. Certain tax-deferred investments include mortality and expense charges, sales charges, and administrative fees which would reduce the performance shown if they were accounted for. Lower maximum tax rates for capital gains and dividends, as well as the tax treatment of investment losses, could make the investment return for the taxable investment more favorable, thereby reducing the difference in performance between the accounts shown. One’s timeframe and income tax brackets, both current and anticipated, should be considered when making financial decisions. Rates of return will vary over time, particularly for long-term investments. Investments offering the potential for higher rates of return also involve a higher degree of risk.

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This hypothetical example is used for illustrative purposes only. Actual results will vary.

The information in this calculator is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

Certain insurance products offered through SilverStar Financial, Inc. Securities and advisory services offered through SagePoint Financial, Inc. a registered broker-dealer and registered investment advisor, member FINRA/SIPC. SilverStar Financial, Inc. and Cy-Fair Federal Credit Union (CFFCU) are separate and independent companies from SagePoint Financial, Inc. SilverStar Financial, Inc. is not registered as a broker-dealer or investment advisor. Securities products are not insured by NCUA, are not guaranteed by CFFCU, and are subject to investment risks including the potential loss of principal invested.

This communication is strictly intended for individuals residing in the states of CO, LA, NC, NJ, OK, TX. No offers may be made or accepted from any resident outside the specific state(s) referenced.

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